Freescale, the Texas chipmaker that was once part of Motorola, has agreed to be acquired by NXP Semiconductors, which was once part of Philips N.V. The cash and stock deal values Freescale at roughly $16.7 billion (including debt) based on NXP’s closing stock price last Friday. That deal value will likely be higher at closing, as NXP’s stock jumped on the news.
Freescale shareholders will receive $6.25 in cash and 0.3521 of an NXP ordinary share for each Freescale common share held at closing, and will own approximately 32% of the combined company. Freescale saw its stock rise more than 9% on the news.
NXP CEO Richard Clemmer will lead the combined company. The transaction is expected to close in the second half of 2015. NXP intends to fund the transaction with $1 billion of cash from its balance sheet, $1 billion of new debt and approximately 115 million NXP ordinary shares.
Freescale was spun off from Motorola in 2004, and focuses on designing chips for automotive, industrial and wireless networking applications. In the wireless infrastructure space, Freescale has supplied chipsets for macrocell base stations to original equipmentmakers like Alcatel-Lucent. In recent years, the company has created solutions for small cell base stations.
Nine years ago, both Freescale and NXP moved into the hands of private-equity investors. Freescale was taken private in a $17.6 billion deal that was at the time the largest-ever buyout of a technology company. The debt that financed that deal has been a drag on Freescale’s earnings, but the company has nonetheless maintained a commitment to spending on research and development. In June 2011, the private equity buyers took Freescale public.
NXP was purchased from former parent Philips N.V. in 2006 by private-equity investors Bain Capital and Kohlberg Kravis Roberts. It went public for the first time in 2010.
